To buy an expensive house at any price: results on the elite suburban real estate market

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    Experts have concluded: overall the cottage market of Moscow region following the Russian economy is going through difficult times. But how to feel its luxury segment in the past year? And what to expect in the future? Could the portal Cottage.ru.

    The context of the time

    The political crisis that began in 2014 has had a negative impact on many sectors of the economy. Was no exception and the construction industry. Developers, purchasing building materials abroad, were not prepared for the sharp twofold drop of the ruble against the dollar and the Euro. The materials were too expensive and erect a new cottage settlements became profitable. Primary market segment began to rapidly shrink, and the demand flow to the secondary market.

    However, the situation was not much better. A country house, especially in the luxury segment, the discerning wealthy customers considered obsolete. In particular, significantly changed their concept of the optimal square footage of home and square footage.

    Even 12 or 15 years ago the fashion was “megalomania”, when wealthy people looking at this country house as a means of self-affirmation, seeking to demonstrate a high status of themselves and others. The result of this attitude was the emergence of “palaces” with elaborate moldings and “castles” with high towers, the area of which often exceeded 1 thousand “squares”.

    However, the years flew by unnoticed, and ideas of the good of the wealthy stratum of society has changed. Through frequent trips to Europe, people have developed a taste for practical and functional solutions. But the economic crisis has shaken many cases, even the once very successful entrepreneurs.

    The result of such processes for country high-end market has been extremely unpleasant. On the one hand, new proposals, adequate to modern requirements, on the market there are very few. On the other hand, houses in the secondary segment, in large part, do not satisfy the changing demands of buyers. Experts sad state: the market faced a shortage of liquidity proposals.

    Where it is sold?

    The negative effects do not subside until now. “We noted a decrease in the number of sales by 30% compared with the year 2016. Moreover, the dynamics of decline continues gradually in 2015”, — said the Director of the residential real estate Department at Penny Lane Realty Sergey Kolosnitsyn.

    According to the Director of Department of consulting, Analytics and researches of company Blackwood Alexander Shibaeva, in 2017, the supply volume in the primary elite countryside market of Moscow region decreased by 14% compared with the year 2016.

    Among the new projects that entered the market in 2017, you can call the settlement premium Eco Art in 30 km from MKAD along the Novorizhskoe highway. Besides it, last year he published a small volume of lots in the existing projects. The largest queues appeared in KP “Uspenskiy Les” on 1st Uspenskoe highway in the village of “Strife-2”. This may also include the plots in KP Agalarov Estate.

    In addition, sales began in Maslovo Residence (25 km Rublevo-Uspenskoe highway) and took a few lots of townhouses in a long time realized the project of premium-class “Azarovo” on Rublevsky highway, says the head of Department of country real estate of company Welhome Ekaterina Lazareva.

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    Sergey Kolosnitsyn adds to this list the residential complex Park Fonte in the New Riga from the developer Villagio Estate.

    The volume and structure of the market

    As told in Blackwood, the total volume of transactions last year in the primary elite segment of the Moscow region made up of lots 295, which is 24% smaller number of units than were purchased in 2016. But there is one interesting detail: if in 2017 the total area purchased by households 54.3 thousand square meters, in 2016 this indicator was much more — 100 thousand sq. m.

    However, Welhome lead to more optimistic data. According to Ekaterina Lazareva, 2017 in the primary elite real estate segment of Moscow region the volume of demand on the number of lots sold decreased by 9.5% compared with the year 2016. However, compared to 2015 year it increased by 18.5%.

    In any case, of the 295 lots that have been implemented in the year 2017, 58% occurred in plots without a contract (FSM), which were concluded 170 deals. Their total area in acres 20% less than 2016, in pieces by 11%. Last year 49% of transactions occurred in the FSM. The share of transactions with cottages in 2017 amounted to 28%. The total area of acquired houses has reached 40 thousand square meters, which is 47% lower than a year earlier. The share of transactions with the elite housing is locked in 2017, 15%, says Alexander Shibaev.

    According to experts, the total number left on the elite suburban market of lots last year amounted to 974 deals in 37 settlements, which is 14% less than in 2016.

    Thus at the end of 2017 primary sales were conducted in 23 settlement projects, the total number of sentences in which amounted to 659 units, adds Ekaterina Lazareva. During the year the offer in the “primary” decreased by 21.4% in two years — 38%.

    In General, demand has shifted to the secondary segment, despite the fact that the quality of the proposal it leaves much to be desired. As noted in Penny Lane Realty, in 2013 “primary” accounted for 59.4% of the transactions of the total market in 2017, that figure had fallen to 24.5%. Thus, the share of secondary market transactions exceeded 75%.

    The issue price

    According to Ekaterina Lazareva, the average cost of a cottage on the primary elite suburban market by the end of 2017 reached 2.46 million dollars (141,3 million), a decrease for the year of 5.4%.

    In Penny Lane Realty emphasize that the average transaction amount in rubles remained at the level of 2016, but in dollars it increased by 13-14%. Sergey Kolosnitsyn explains the stabilization of the dollar. The share of the dollar exposure of the first objects has increased. Starting in 2015, it increased by 2%. “Recall that in 2013 the proportion of the exposure in dollars was 75.8%, and in 2016, or 34.7%,” the expert said.

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    Although on Rublevo-Uspensky highway the average cost of supply (including the cost) of land last year in the primary sector remained unchanged at 3.8 thousand dollars for 1 sq. m, Novorizhskoe direction this indicator for the year decreased by 16%. In the result, the average price dropped to 3 274 dollars for 1 sq. m, says Ekaterina Lazareva.

    Where the rich live?

    According to Alexander Shibaeva, the most popular destination among buyers of luxury homes remains Novorizhskoe highway.

    Rublevo-Uspenskoe highway is in second place through the implementation of the 21% of the lots premium.

    However, if you look at the structure of the sentence, and not consumption, for the first time in the last seven years the leader has changed, says Ekaterina Lazareva. The first place was for the Ruble, which have 46% of the total supply in the primary market.

    Novorizhskoye highway occupies the second place. Here are the sale of 45% of the total supply.

    Developers stimulate sales

    Last year was marked by the boom of discounts from the developers and a review of cost indicators in a cottage village in a time of economic crisis (referring to the gradual transition of the price-list of indicators from the dollar area in the ruble), Ekaterina Lazareva tells.

    Therefore, for 2016, although it was difficult, managed to implement more objects than in 2017. Of course, now the developers also hold shares and concede in the price negotiation process. However, the discounts now are not the same as the price indices have been revised to reflect market realities.

    However, average unit prices over the past year, still decreased to 8-10% for houses and semi-detached lots, 2% — in the areas in the de luxe class. In the premium class price reduction of 10% was observed in the segment of cottages, lots for semi-detached prices fell by 4%, says Alexander Shibaev. As a result of lower demand during the year, elite settlements have stimulated sales due to special offers, and at the end of the year with new year promotions.

    This year, as in the past, more new high-budget settlements will appear in the business class than in the elite segment, forecast in Blackwood. However, the situation may change with the intention of developers to implement new settlements on the po.

    So, toughening of requirements to the developers in the adoption of amendments to the FZ-214 from July 2018, may force developers to bring new projects to market in the first half, which may affect the increase of new supply in the market in all classes.

    Despite some differences on specific indicators, in General, experts without much optimism assessed the results of the elite country market of the Moscow region. But what is bad for the producer, sometimes it can be good for the consumer. First of all it concerns the cost, which developers are forced to reduce the unfavorable market conditions in pursuit of a buyer. Why not take advantage of the special offer and buy the home of your dreams at a bargain price?

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